United We Brew: How Coffee Cooperatives Are Empowering Farmers

Coffee farmers working independently on small plantations can struggle to make meaningful deals and consistently earn money. However, the development of coffee cooperatives has led to more sustainable, beneficial arrangements for small farmers in developing nations.

Coffee cooperatives prevent independent coffee growers from exploitation. From increased buying power to social and economic support, here’s how coffee cooperatives are empowering farmers across the globe...

History of Coffee Cooperatives

Coffee cooperatives aren’t a new concept. They’ve been a part of the industry since the 20th century. The National Coffee Growers Federation (FNC) in Colombia has been operational for over 60 years, and now, this coffee-growing giant is home to over 30 cooperatives.

Kenya has had coffee cooperatives since the early 1900s while it was still under British colonial rule. As Kenya was a key exporter, coffee cooperatives made trading easier for the colonial powers and enabled farmers to access wider international trade. Nowadays, there are over 22,000 cooperatives in Kenya alone.

The need for coffee cooperatives came from both coffee brands and farmers. For the brands, it made buying coffee easier — you could get more raw coffee beans in one transaction, and the supply chain was more reliable. If one farmer produces a poor yield, brands have access to several other farmers in the coop.

On the farmers' side, they can demand better prices, appeal to larger, international brands, and access the support of the cooperative when it comes to making deals. The idea of coffee cooperatives is similar to unions, and they emerged at a similar time.

How Do Coffee Cooperatives Work?

The concept of coffee cooperatives is simple. It’s essentially a membership that farmers pay to be a part of. In return, the farmers become part of a wider buying and selling block. They gain access to a range of benefits including better prices, educational programs, certifications, and increased support for their business.

Each coop has a collection of small plantation owners within it. Each farmer on their own wouldn’t be able to provide enough coffee to support international contracts. However, as part of a coop, they can band together to provide enough volume for larger brands.

With bigger brands, farmers can get more reliable contracts and better rates. This allows them to invest more money back into their farms to improve yield and production.

As with any club, most coffee cooperatives have certain rules and standards that farmers have to abide by. Some are committed to sustainable practices, organic farming, or certain geographical restrictions. This ensures a premium product for the consumer and a fair rate for each farmer in the cooperative.

The sizes of individual cooperatives can vary. For example, the Capucas Coffee Cooperative in Honduras has over 900 members, despite only starting 25 years ago with 25 members. Other cooperatives are made up of less than 50 farmers with small-batch offerings for boutique coffee brands and vendors.

We work with Vietnamese coffee cooperatives to source our single-origin robusta and arabica coffee. Although I’d love to work with independent farmers, cooperatives are easier to work with, providing greater benefits for the farmers and Cafely.

Which Countries Have The Most Coffee Cooperatives

While countries like Honduras, Brazil, and Colombia have had coffee cooperatives for decades, smaller coffee-growing nations are starting to form organizations too.

It’s no surprise that the largest coffee cooperative in the world is in Brazil. The Cooxupé cooperative has over 18,000 members and 97% of their members are small producers with family farms. This cooperative is Brazil’s largest exporter of coffee beans, which makes them the largest exporter worldwide. In 2022 alone, the cooperative exported 6.8 million bags of coffee beans.

Colombia has around 30 cooperatives nationwide. Most of these are based in the “Coffee Triangle” region. 30% of the farms in the Coffee Triangle belong to one cooperative — the Anserma Coffee Cooperative in Caldas. Described as a ‘medium-sized’ coop, Anserma has 2,000 members and is one of the leading exporters of Colombian coffee worldwide.

Coffee cooperatives aren’t just big in South America. Kenya’s 22,000 coffee cooperatives have different options, rules, and standards. With so many cooperatives in one nation, the memberships for each are a lot lower and the standards are much higher.

With that said younger coffee producers in Kenya are swaying away from mainstream cooperatives due to decision-making disputes. Cooperatives are a democracy, but there are leaders. Kenyan coffee farmers that choose the wrong coop for their farms’ aims and values, often feel exploited.

We have around 1000 coffee cooperatives in Vietnam but new cooperatives seem to appear each year.

What Are the Benefits of Coffee Cooperatives?

There are several benefits of coffee cooperatives for farmers in developing nations. It goes beyond financial benefits and has become the gold standard for coffee supply.

Here are the benefits of coffee cooperatives for brands and farmers:

1. Increased Supplying Power

One of the critical benefits of coffee cooperatives for farms is the increased supply power. The increased supply power means that cooperatives attract bigger brands and buyers. By having more coffee to sell, cooperatives can negotiate better contracts which benefits all parties more [1].

2. Better Prices

The wholesale price that cooperatives demand is often much more than a single independent farmer can get from brands. This is a huge part of why farmers pay to join cooperatives — they can earn their membership fees back quickly with the increased prices and the larger contracts.

This is one reason I decided to opt for cooperatives to source coffee for cafely. I don’t mind paying a little more to ensure our farmers are producing great-quality coffee for a fair price.

3. Access to Globally-Recognised Certification Schemes

Certain globally recognized certification schemes like Fairtrade and Rainforest Alliance can be inaccessible to independent farmers in developing countries [2].

These schemes and certifications allow farmers to demand higher prices and gain access to better contracts, especially within the sustainability sector. It also enables farmers to futureproof their enterprises for years to come, which contributes to the longevity of the industry.

4. Improved Innovation

Speaking of future-proofing farmers' enterprises, coffee cooperatives can improve innovation and educate farmers on new farming techniques. This includes more sustainable farming practices, climate-resistant techniques, and ways to improve coffee yields.

Coffee cooperatives can also help with the business side of coffee production. This can include improving negotiation skills, budgeting, and ways to structure the farmers’ business to be more efficient.

5. Social Support

Coffee cooperatives are as much about social support as they are about financial support.

Farming can be an isolating profession, so having people in the same industry who know what independent farmers are going through is a huge benefit. Coffee cooperatives can offer support with things like family assistance, educational support, and a network to rely on if there are challenges with crops or certifications.

6. Improved Sustainability

Coffee brands and consumers are now focusing on sustainable practices and farms that are innovating in the field. Coffee cooperatives can offer more sustainable methods and environmental innovations which make them more appealing to bigger brands [3].

Investing in sustainable practices can be expensive, so for individuals outside of a coop, it’s unfeasible. Without sustainable practices, farmers can’t demand higher rates for their coffee and will struggle to find contracts as sustainable coffee becomes standard practice.

I’m big on sustainability. Some places in my home country are littered with plastic and chemical pollutants. Although I’d like to do more for the planet, opting for a sustainable cooperative ensured that Cafely wasn’t going to impact Vietnam’s environment negatively.

The Role of Impact Funds in Coffee Cooperatives

Some cooperatives, like the imaginatively named “Cooperative Coffees,” set up impact funds in case of emergency. In this case, it was to support the farmers during the pandemic and the impact of leaf rust on Coffea arabica (arabica coffee) plants.

The growing climate crisis is having an increasingly negative effect on the coffee-growing community, so having an emergency fund is a critical part of running a sustainable business.

Cooperative Coffees saves three cents per pound of green coffee sold and puts the savings directly into the Impact Fund. This simple practice generates $170,000 annually — enough to save several farmers suffering from climate impact, leaf rust, and other climate-related crises.

Saving for an emergency fund as an independent coffee farmer can be tricky. A lot of the time, they barely make enough money to break even. The majority of independent coffee farmers in developing countries are living below the poverty line.

By joining forces through coffee cooperatives, farmers gain access to these emergency funds — ensuring that one bad crop won’t bankrupt the farm.

Why Coffee Cooperatives Matter

Coffee cooperatives are crucial for supporting small-scale coffee producers and future-proofing their livelihoods. Coffee farming is affected by the weather, climate, and volatility in prices and the market — cooperatives protect vulnerable farmers from these factors.

With the increased buying power, better contracts, and larger emergency funds, cooperatives essentially insure small plantations if things go wrong.

They provide much-needed support to farmers in developing nations, allowing larger brands to discover the coffee-growing culture in new places. Much like unions, they protect smaller businesses and individual workers, allowing farmers to focus on the important part — growing great coffee.

References:

1. Wardhiani, W. F., Karyani, T., Setiawan, I., & Rustidja, E. S. (2023). The effect of performance on the sustainability of coffee farmers’ cooperatives in the industrial revolution 4.0 in West Java Indonesia. Sustainability, 15(6), 4901.
2. Bredberg, S. (2010). Fairtrade versus Rainforest Alliance.
3. Indayani, I., Abadi, I. I., & Rizkika, R. (2023, December). Best Practices for Sustainability of Cooperatives and Coffee Farmers. In Proceeding International Conference of Community Service (Vol. 1, No. 2, pp. 348-355).